Interesting topic and one that really resonates with me. I have always been interested in learning how to make money the way "people with money" make it.
Personally I have come to the conclusion that a few solid stocks paired with protective puts and/or call options (to make a little extra money for sideways markets) provides a decent way to generate some extra income and greatly reduces risk of losing everything from a single mistake
Hard-won lessons about money and investing
131–140 of 264 posts
Re: Hard-won lessons about money and investing
#132Earlier quoted context omitted.
Living on a low percentage of income seems like a great strategy if you're optimizing for dying with the maximum amount of money in the bank. I think many people in this thread need to consider if that really is the game they want to be playing. I'd think people would be better off maximizing their total happiness. There's research showing that having good memories from the past positively affects momentary happiness…
But money don't buy good memories. I have much better memories of camping with friends for near zero euros, than expensive hotels.
You need to consider the opportunity cost too. While you were camping in the bush, you weren't earning.
Re: Hard-won lessons about money and investing
#133Most of this is standard sane advice, but the tip about "work for equity [in the next Google] instead of chasing salary": well if we all could pick stocks like that, we would not need the rest of his advice!
Re: Hard-won lessons about money and investing
#134> If you’re an employee working for salary, it’s going to be hard to reach that level of independence. ... You can try to radically lower your financial burn rate, but few Americans have taken that step. So many people are quick to dismiss living well within one's means as a way to financial independence. Here's the link to the facts again: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... TL;DR: Live o…
Don't forget health insurance. Everyone forgets hrealth insurance. Having a family is tricky too.
Re: Hard-won lessons about money and investing
#135Earlier quoted context omitted.
Well, except for how difficult that is. Living on only 35% of after tax income requires you either A) live extremely cheaply or B) make tons of cash. Roughly speaking, in California, this requires living off of 20% of pre-tax income. As an example, to live off $35k/year in SF as a single person (which would be considered modest in tech circles), you'd need to earn $175k/year. With a family, this gets more unrealistic…
Living on a low percentage of income seems like a great strategy if you're optimizing for dying with the maximum amount of money in the bank. I think many people in this thread need to consider if that really is the game they want to be playing. I'd think people would be better off maximizing their total happiness. There's research showing that having good memories from the past positively affects momentary happiness…
security is a thing. When I went into freelancing I did it easily since I lived so cheaply. My monthly bills were under $1k and I was making an above average wage for software dev in my area.
I knew a guy who wanted to get into freelancing but wouldn't do it because his expenses were too high.
There's happiness, but there's also planning and self control.
Re: Hard-won lessons about money and investing
#136> If you’re an employee working for salary, it’s going to be hard to reach that level of independence. ... You can try to radically lower your financial burn rate, but few Americans have taken that step. So many people are quick to dismiss living well within one's means as a way to financial independence. Here's the link to the facts again: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... TL;DR: Live o…
>Assumptions
>– You can earn 5% investment returns after inflation during your saving years
At least, in the US this assumption is not valid any longer. There is no risk-free investment that can earn you 5% after inflation annually.
Re: Hard-won lessons about money and investing
#137Regarding most of these lessons, in 2004, Google brought in experts on personal investing to educate employees heading into its initial public offering:
http://www.modernluxury.com/san-francisco/story/the-best-inv...
TL;DR: Put your money into some broad-based, low-cost index funds.
Re: Hard-won lessons about money and investing
#138Made me think (as most of the lessons coincide) about the book I'm reading at the moment - 'Money: Master the Game' by Tony Robbins: http://moneymasterthegame.com/
Want to see how hard it is to predict the market? Watch this message from Tony Robbins to his followers in 2010: https://www.youtube.com/watch?v=KzREzgDoaZg
He says he believes the market may be entering a dangerous period and all but advises getting out of stocks. (Watch part 1 and part 2). If you followed his advice from 2010 until now, you've lost out big time. My point isn't that Tony Robbins was wrong, it's that it is very hard to predict the market.
Re: Hard-won lessons about money and investing
#139How many people are actually living entirely off passive income from interest, dividends, and capital gains? I feel that goal—which requires millions of dollars in investable financial assets—is only realistic for a tiny percentage of the population.
Re: Hard-won lessons about money and investing
#140Consider also buying a bunch of bitcoins. The reward/risk ratio is too high in my opinion.